BI&P- Indusval - 1Q15 Results Presentation

RESULTS

PRESENTATION

1Q l 2015

Disclaimer

This presentation may contain references and statements representing future expectations,

plans of growth and future strategies of BI&P. These references and statements are based on

the Bank’s assumptions and analysis and reflect the management’s beliefs, according to their

experience, to the economic environment, and to predictable market conditions.

As there may be various factors out of the Bank’s control, there may be significant differences

between the real results and the expectations and declarations herewith eventually anticipated.

Those risks and uncertainties include, but are not limited to, our ability to perceive the

dimension of the Brazilian and global economic aspect, banking development, financial market

conditions, and competitive, government and technological aspects that may influence both the

operations of BI&P as the market and its products.

Therefore, we recommend the reading of the documents and financial statements available at

the CVM website (www.cvm.gov.br) and at our Investor Relations page in the internet

(www.bip.b.br/ir) and the making of your own appraisal.

2

Highlights

3

Expanded Credit Portfolio totaled R$3.9 billion, -6.8% in the quarter and -1.9% from March 2014, reflecting the more conservative credit policy

adopted by the Bank in light of the macroeconomic scenario and preparation of the balance sheet of BI&P for the launch of the operation with Lojas

Renner, expected to initiate in the coming months.

During 1Q15, we originated loans of R$1.2 billion, of which R$707 million were loan renewals and R$457 million were fresh loans in the quarter,

proving the tremendous asset generation capacity of the commercial area.

Loans rated between AA and B corresponded to 92% of the expanded credit portfolio, compared to 90% in March 2014. Of the loans granted in the

quarter, 95% were rated between AA and B, reflecting the Bank’s focus on preserving the quality of its loan portfolio

The Corporate and Emerging Companies segments accounted for 64% and 36%, respectively, of the expanded credit portfolio, compared to 56%

and 43%, respectively, in March 2014, in line with our more conservative lending policy.

Managerial ALL expense in the last 12 months corresponded to 1.09% of the expanded credit portfolio (0.97% in 4Q14), coming within the

Management’s expectations.

In line with the reduction in the expanded credit portfolio, Funding totaled R$4.1 billion, -7.2% in the quarter and +3.6% in 12 months. We continued

to diversify our depositor base through partnerships with more than 75 brokerages, distributors and independent investment agents, and closed the

quarter with a depositor base of over 13,800 depositors (5,860 in March 2014). Free Cash totaled R$662.0 million at the end of 1Q15.

Income from services rendered and Tariffs totaled R$11.6 million in 1Q15, -17.1% in the quarter, due to lower fee income generated by the

commercial banking operation and from the investment banking division, but +5.0% from 1Q14, mainly due to revenue from Guide Investimentos.

Guide Investimentos, our investments and distribution arm, announced one more important partnership: with SLW Corretora, a securities broker that

has been operating in the Brazilian financial markets for more than 40 years. This alliance is the result of the successful model of partnerships, which

has brought a sizeable client and asset base under the management of Guide, and has also brought value to BI&P by the extensive distribution

network for our funding products. Once the already contracted migrations are concluded, we expect to Guide will have assets under management of

R$4.0 billion, compared to R$0.9 billion in 1Q14.

With regard to expenses, the Bank’s personnel expenses decreased 14.5% in the quarter and by 21.4% from 1Q14. The workforce of BI&P

decreased slightly by 2.6% from the previous quarter and by 21.0% from 1Q14, as a result of the adjustments made throughout last year. The Bank’s

administrative expenses decreased by 5.6% in the quarter and 6.1% from 1Q14 due to the continuous strict control over expenses.

Net Result in the quarter was a loss of R$6.7 million, up 31.7% compared to 1Q14, but far below the Bank’s potential. The quarterly Result was still

impacted by the need for economies of scale, considering our risk appetite and its direct effects on the spread on loan operations, and the still

negative contribution from Guide Investimentos on account of the recent investments in that platform.

3,926 3,920 3,992 4,136 3,853

Mar 14 Jun 14 Sep 14 Dec 14 Mar 15

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Loans and Financing in BRL Trade Finance

Guarantees Issued (L/G and L/C) Agricultural Bonds (CPR, CDA/WA & CDCA)

Private Credit Bonds (Debentures)

Expanded Credit Portfolio

Contraction of 6.8% in the quarter in line with a more conservative approach

4 * Other Credits include Non-Operating Asset Sales Financing, Consumer Credit Vehicles, and Acquired Loans.

Average Exposure per

Client | R$ mm Mar 14 Dec 14 Mar 15

Corporate 8.6 11.2 11.6

Emerging Companies 2.9 3.2 3.2

55.8%

63.9%

43.3%

35.8%

0.9%

0.3%

Mar 14

Mar 15

Corporate Emerging Companies Other*

-1.9%

Expanded Credit Portfolio Development

Continuously focusing on higher quality assets

5

794 818 732 731 457

381 606 776 692

707

1,174

1,424 1,508 1,423

1,163

1Q14 2Q14 3Q14 4Q14 1Q15

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Credit Origination

New Transaction Renewed Transactions

4,136 3,853 1,163 (1,281)

(159) (6)

Dec 14 AmortizedCredits

CreditExits

Writeoffs

CreditOrigination

Mar 15

R$ m

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98% of the new transactions

in the last 12 months are

classified between AA and B


6

Loans & Financing in BRL*

56%

Trade Finance*

6%

BNDES Onlendings

11%

Guarantees Issued

5%

Agricultural Bonds 19%

Private Credit Bonds

2% Other 1%

March 2014

12.0%

13.7%

13.9%

26.4%

27.8%

30.6%

25.1%

25.8%

26.4%

36.5%

32.7%

29.1%

Mar 14

Dec 14

Mar 15

Client Concentration

top 10 11 - 60 largest 61 - 160 largest Other

Loans & Financing in BRL*

49%

Trade Finance*

6%

BNDES Onlendings

12%

Guarantees Issued

5%

Agricultural Bonds 25%

Private Credit Bonds

2% Other 1%

March 2015


Distribution by economic sector

7

14.2%

1.9%

1.9%

2.1%

2.1%

2.7%

3.2%

3.9%

3.9%

3.9%

4.0%

5.0%

6.8%

8.7%

13.7%

22.3%

Other Industries (% lower than 1.4%)

Financial Activities

Raw Materials

Chemical & Pharmaceutical

Textile, Leather and Confection

Metal Industry

Commerce - Retail & Wholesale

Infrastructure

Transport and Logistics

Livestock

Power Generation & Distribution

Automotive

Food & Beverage

Oil, Biofuel & Sugar

Real Estate

Agriculture

March 2014

14.3%

2.0%

2.1%

2.7%

2.8%

2.9%

2.9%

3.4%

3.5%

4.5%

5.5%

6.4%

8.8%

12.1%

26.1%

Other Industries (% lower than 1.4%)

Infrastructure

Power Generation & Distribution

International Commerce

Financial Activities

Textile, Leather and Confection

Commerce - Retail & Wholesale

Transport and Logistics

Automotive

Raw Materials

Livestock

Food & Beverage

Oil, Biofuel & Sugar

Real Estate

Agriculture

March 2015

Net Interest Margin (NIM)

8

3.94% 4.43%

4.12% 4.14% 4.04%

1Q14 2Q14 3Q14 4Q14 1Q15

Managerial NIM with Clients

Managerial Net Interest Margin with Clients was 4.04% in 1Q15

(4.14% in 4Q14) especially due to the fewer working days in the quarter

Fees, Client Desk, IB and Brokerage Revenues

9

12.0

17.9

15.9 15.1

13.8

1Q14 2Q14 3Q14 4Q14 1Q15

R$ m

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Commercial Fee Client Desk IB Guide Investimentos

M&A and fixed income operations totaling nearly R$160 million were

concluded in the quarter and the number of proposals/mandates has

increased constantly. We currently have 34 ongoing mandates.

Expanded Credit Portfolio Quality

95% of loans granted in the quarter were rated from AA to B

10

Credits rated between D and H totaled R$165.3 million at

the end of 1Q15

R$87.7 million (53% of the expanded credit portfolio

between D-H) in normal payment course

Credits overdue +60 days amount to R$59.2 million

Additional ALL not allocated balance = R$16.9 million 2%

7%

8%

52%

51%

53%

35%

34%

31%

3%

3%

3%

7%

5%

4%

Mar 14

Dec 14

Mar 15

AA A B C D - H

92.4%

92.1%

89.8%

2.6%

2.0% 2.0% 2.1%

2.8%

2.6%

1.8% 1.5% 1.7%

2.1%


Delinquency (NPL)

NPL 60 days NPL 90 days

0.99% 0.87% 1.05% 0.97% 1.09%

1.10% 0.66%

1.45% 0.67%

1.58%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%


Managerial ALL Expense 1

Last 12-month Managerial ALL Expense

Quarterly Managerial ALL Expense annualized

1 Managerial ALL Expense = ALL expense + Discounts granted upon settlement of loans – Revenues from recovery of loans written

off + Adjustments due to the shareholders’ agreement at the time of acquisition of Banco Intercap and to credit assignments.

2.1% excluding just

one client, who was in

arrears but had settled

his operations in April

Time Deposits (CDB) 21%

DPGE I 26%

DPGE II 7%

LCA 25%

LF & LCI 4%

Interbank & Demand Deposits

1%

Onlendings 7%

Foreign Borrowings

9%

Mar 14

3,930 4,135 4,186

4,386 4,071


R$ m

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Local Currency Foreign Currency

Funding

Product mix helps with cost reduction

11

Time Deposits (CDB) 22%

DPGE I 18%

DPGE II 10%

LCA 34%

LF & LCI 5%

Interbank & Demand Deposits

2%

Onlendings 4%

Foreign Borrowings

5%

Mar 15

Funding products are distributed to

more than 13,800 depositors

Agribusiness letters of credit, Real estate letters of credit and Bank notes are represented, respectively, by LCA, LCI and LF.

Insured time deposits are represented by DPGE. DPGE I and II are two types of DPGE and differ in cost and framework.

Guide Investimentos

12

• Omar Camargo: R$500 million of AUM and 1,320 active clients

• Geraldo Correa: R$300 million of AUM and 702 active clients

• Bullmark: R$600 million of AUM e 1,080 active clients

• SLW: R$1,900 million of AUM. Migration process initiated in April.

ACQUISITIONS

• Open investment platform: selection of the best products available in the market

• Impartial approach: single fee charged on AUM

• Innovative suitability analysis process: personal documents not required to open an account

GUIDE’S CLIENT

EXPERIENCE

• Expectation of R$4,0 billion of assets under management after the migration process of SLW is concluded

• 10,000 active clients are expected after the migration process of SLW is concluded INDICATORS

0.9

1.9 2.1

Mar 14 Dec 14 Mar 15

R$ b

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Assets under Management (AUM)

2,200

5,000 5,200

Mar 14 Dez 14 Mar 15

Active Clients

24.5 22.8 20.8 22.6 19.3

11.8 11.0 11.2 11.8 11.1

381 349

332 309 301

0

50

100

150

200

250

300

350

400

450

-

10.00

20.00

30.00

40.00

50.00

60.00

70.00

1Q14 2Q14 3Q14 4Q14 1Q15 1Q14 2Q14 3Q14 4Q14 1Q15

Personnel and Administrative Expenses*

Personnel Expenses Administrative Expenses Headcount

Efficiency Ratio

13

Personnel Expenses: decrease of 21.4% in personnel

expenses from 1Q14 and reduction of 17.4% in headcount

Administrative Expenses: reduction of 5.6% in the

quarter and 6.1% from 1Q14

100.6%

72.6% 88.2% 87.8%

97.5%

1Q14 2Q14 3Q14 4Q14 1Q15

Efficiency Ratio *

* Information based on the managerial income statement of the financial conglomerate without Guide Investimentos.

Details in the 1Q15 Earnings Release.

-6.1%

667.1 671.4 672.8 676.6 671.4

5.9x 5.8x 5.9x 6.1x 5.7x

-10.0x

-8.0x

-6.0x

-4.0x

-2.0x

0.0x

2.0x

4.0x

6.0x


R$ m

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Shareholders’ Equity and Leverage

Profitability, Capital Structure & Ratings

14

Agency Rating Last

Report

Standard

& Poor’s

Nacional: brA-/Negative/brA-2

Global: BB-/Negative/B Apr 2015

Moody’s Nacional: Baa2.br/Stable/BR-3

Global: B1/Stable/Not Prime Mar 2015

Fitch

Ratings Nacional: BBB-/Stable/F3 Sep 2014

RiskBank

Index: RiskBank: 9.96

Low Risk Short Term

Disclosure: Excellent

Jan 2015

13.7% 13.3% 13.2% 13.1% 13.0%


Basel Index (Tier I)

-9.9

1.1 1.7 2.0

-6.7


R$ m

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Net Result

BI&P- Indusval - 1Q15 Results Presentation

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